- The US dollar initially did rally a bit during the early hours here on Wednesday but gave back those gains to show signs of life again. Ultimately, this is a market that I think is going to continue to be very noisy in general.
- But I also recognize that we have a situation where we are basically hanging around between the 1.39 level on the bottom and the 1.40 level on the top. I do think that eventually the US dollar ends up outperforming the Canadian dollar and we do break above the 1.40 level. If and when we do that, I think we’ve got a situation where traders will really start to look towards the 1.4250 level.
On a Move Lower…
A breakdown below the 1.39 level opens up a potential move down to the 200 day EMA. But in general, I think you’ve got a situation where you’re still looking to buy dips. The interest rate differential still favors the uh US dollar over the Canadian dollar. And I think with this being the case, we look at any opportunity to buy on a dip as a gift. Now, keep in mind that Friday we have the Canadian employment numbers coming out. And that of course has a major influence on this pair and will continue to be important to keep in the back of our mind. With this, I like the idea of buying this pair. I do think eventually we will go much higher. But really at this point in time, we’re just looking for the next catalyst. And again, that catalyst could very well be the Friday session with that jobs number. Also, keep in mind that the US government is still shut down, and therefore we are without any significant US data at the moment, but this could change suddenly.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
